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(This post is written by Nikson from Stylelife, I take absolutely no credit for it. If mods want to move it to General Discussion, please do. My low post count prevented me from doing so myself. All the following is copied & pasted. Enjoy!)
What Are Negs? The Common Misconception
A lot of aspiring PUAs, especially those who haven't been exposed to much material other than Neil's "The Game", have a poor understanding of what a Neg is, or its purpose. A big part of this post will paraphrase Mystery's Neg Theory, since he's the one who came up with the concept, then later expanded it into Disqualification Theory. But before we go into what a Neg is, let's take a look at what a Neg is NOT:
A Neg is not an insult. Do not, under any circumstances, bring up something a girl is insecure about. If she's on the short side, do NOT ask how many inches high her heels are, with a smirk on your face. A Neg is not meant to undermine her. It's not meant to make her cry, or frown, or yell at you. Don't insult people, now matter how strong their "bitch shields" may seem to you.
A Neg is not a joke. Another mistake I notice often is confusing teasing (a.k.a. Cocky/Funny) with Negging. A Neg is not making fun of the girl's pink drink or joking about her huge purse. While these things are funny and usually give a positive reaction from the girl, they are simply not Negs. Also, please keep in mind there is a line between teasing and insulting. Don't cross this line. Especially if you are not already a funny guy, don't jump head first onto the Cocky/Funny bandwagon, try to laugh and joke about everything a girl says and does, then write Field Reports about how they're ******* who can't take a joke. Or worse, that you "over-Negged". You didn't neg at all. You just have a bad sense of humor. You can work on that, and the Community can certainly help, but this post is not about that.
Again, to summarize: Negs are not about making the girl feel inferior, so don't insult her. Also, negs are not meant to be funny or witty, so don't confuse them with jokes and teasing.
With all that out of the way, what is a Neg?
Mystery coined the word Neg, as a shortened version of "Negative Compliment". A Neg is an observation, statement or question, said or asked as honestly and innocently as possible, which "accidentally" has a slightly negative implication. You, the PUA, must seem completely unaware of this negative implication. The most classic example, and Mystery's first Neg, is the famous "Nice nails! Are they real? (the girl admits that they're not) ..oh. Well... they're STILL nice." Allow me to break down this Neg, to explain it better.
First part: "Nice nails!"
This is NOT said sarcastically, as some people clearly believe. If it had been sarcastic, it would be either an insult or a joke. Most likely the former. But in the context of a Neg, it is said honestly, with a friendly smile. It's a compliment. Remember... Neg is short for Negative Compliment.
Second part: "Are they real?"
This is asked in the same tone of voice as the first part. You gave a compliment and are now enquiring about the item you noticed. You are sincere and friendly. HOWEVER, the sneaky thing is that a beautiful woman will likely have fake nails, just as she may have a weave in her hair, a push-up bra, high heels and so on. They are all accessories that enhance her physical appearance. It's peacocking. So her nails are actually fake. But you, the friendly guy, are apparently oblivious to this fact. Which is why your question, that follows up from the original compliment, accidentally points out something negative about her: she will have to admit that her nails are, in fact, fake. Which, even though not that big of a secret or a social faux pas, is still not exactly a nice thing to have to say in front of your friends. It has the subtle psychological effect of making her realise that she is not entirely honest about her looks and, therefore, who she is. It's a small effect, but it's there.
Third part: "...oh. Well... they're STILL nice."
We can break this down further into two parts. The first is "...oh." When she admits that her nails are fake, you realize that your compliment was unfounded, and you're actually slightly disappointed. Your opinion of her has just dropped a bit. And there's more: "Well... they're STILL nice." These last couple of words are said with a small shrug of your shoulders. Having realized (and been disappointed) that something you like about her isn't what it appears to be, you do the polite thing (but a lot less enthusiastic than your original compliment) and tell her they still look nice (With the unspoken continuation "...even though they're fake"). This makes a beautiful woman consciously realize that you are NOT impressed by her looks, like every other guy she meets. She also realizes that your opinion of her is lower than it was a moment ago... but EVERY guy wants HER! She's HOT, dammit!
The final effect is that the woman will realize you're not affected by her charms, so you are not just another guy who's hitting on her. You don't have a massive boner just by talking to her. Also, because of this small stain on her perfect self-image, she will now actively try to impress you (by qualifying herself).
Of course, not all negs have to be this meticulously pre-designed with such high detail and effect. Just telling a girl she's "such a nice girl" with an honest smile and voice tone will have the same impact. No girl wants to be seen like the "nice girl", just like guys don't want girls to see them as "nice guys". In other words... not very exciting people (boring even), and most likely LJBF material!
The final note is that a Neg is meant to convey disinterest. Negs are disqualifiers. For completeness sake, the definition of a disqualifier is "a statement, question or physical gesture that communicates the fact that you do not see the woman as a potential mate." Disinterest does not mean you look down on her. Merely that she is just another face in the crowd. For some strange reason, you don't notice just how gorgeous and sexy she is. You're not stuttering or sweating. In fact, you're almost acting like she's your sister. This makes her curious, and she begins to wonder just how many beautiful women are in your life. There must be some, if you are so unaffected by her beauty.
*EDIT*: Part Two (several posts below) added to original article, in case people linked to it don't realize there's a second part.
Part Two: When should you Neg?
As I stated in Part One above, the purpose of Negs is to convey disinterest, thus giving the girl a reason to chase you and MAKE you interested. The implication is that it lowers the girl's "bitch shield". Which is what a lot of people focus on (instead of the "make her chase you" part), and where the insulting pseudo-Negs usually come from.
Who should be Negged?
Now, since Mystery is the inventor of the Neg, he also gave a guideline on how they should be used: "9s and 10s need up to three negs. 8s can only take one. 7s and below will react badly to even a single Neg." Let me say that again: Mystery gave it as a guideline. Not only is the HB rating scale subjective (beauty is in the eye of beholder and all that), but each person is different.
When judging how many Negs a girl probably needs, you should base your decision on her personality, especially her ego. If she's the type of girl who loves to tease guys in exchange for free drinks, or who is louder and more aggressive than her friends, or just overall bratty and up herself, then she'll most likely assume you're hitting on her just by your mere presence. These are the girls that Negs are meant for, regardless of whether they are SHB10s or UGs.
I often meet attractive (and sometimes flat-out gorgeous) girls who will smile and turn to face me when I only say "Hi!" to them. They're friendly people, and the constant stream of AFCs trying to chat them up hasn't made them retreat into a shell. These girls shouldn't be Negged, even if they're 10s.
When should they be Negged?
Okay. So within the first two to five minutes of the conversation (sometimes even less), you should be able to tell who are the feisty, combative girls in the group, and who are the open, friendly ones (or just shy or indifferent). If your target is a feisty one, then you should throw a neg when appropriate (we'll get to that real soon!), see how she (and her friends) reacts, and decide whether she will shortly require another one or not. A great time to Neg your target is when she is seeking attention (since you don't give your target attention early on, and instead focus on the rest of the group. Right?). "Oh my God! Is she always so grabby?" if she's reaching for your personal items (hat, camera, etc.) or "Is she always so needy?" if she's begging to join an activity (photo viewing, palm reading, etc.) are classic examples.
Due to the purpose and effect of Negs, they should be performed in A2 (if you follow Mystery Method), before and/or during your DHVs. The target (and group) must feel safe before they will allow themselves to become attracted to you. Once the attraction is there (so in A3), most of the time you should stop Negging, unless your target is extraordinarily strong-willed (i.e.: has a very strong frame in which SHE is the prize). However, once mutual attraction is achieved (when A3 is complete), and you start building a deeper connection (C1), the Negging must stop. You are already interested in each other, so do NOT go backwards by showing disinterest. No, it's not push/pull. No, it's not cat string theory. Those things should, indeed, continue all the way to sex and beyond, but not in the form of Negs. And they are beyond the scope of this topic.
However, if your target is NOT one of the feisty girls, but there are feisty girls in the group, then these should be your main concern early on, because they are the most likely cockblocks. Don't ever neg the obstacles. You may want to ask "But Nikson, they will think you're hitting on them or their friends, so they will probably cockblock. How do you disarm them without Negging?" The answer is disqualify yourself. Remember, Mystery expanded his Neg Theory into the broader Disqualification Theory. Negs are one type of Disqualifier, but they are meant only for the target. Group Disqualifiers are those that work on everyone at the same time, such as "If I wasn't gay, you'd be so mine!", or "You girls remind me of my sisters so much! I can already feel that if I hang out with you for more than a few minutes, I'll start pulling my hair out! So let's make this quick...", or even non-verbal Disqualifiers, such as opening the set with a girl or two on your arm(s). If the girls see you with another woman, they won't think you're hitting on them.
In summary:
If your Target is an attention-seeker, snotty, or feisty, then neg her. Examine her reaction, then decide if another is appropriate.
If your Target is friendly, shy, or appears disinterested (so far), don't neg. Just demonstrate value and look for IOIs.
If the attention-seeker, snotty, or feisty girl is an obstacle, don't Neg her. Instead, disqualify yourself to the entire group, and befriend them (the feisty one especially).
That is indeed an excellent post. Negging is new to me. I have been somewhat of a natural. Since I started taking some tips from this forum my game was doubled. I told this random, def. HB8+ model on a site that I thought she was wierd. She immediately thanked me and we started flirting. She said she always gets asked out online, etc. I said I would never date her and hope she is not really as boring in real life as she is on the net. Perhaps I overdid it, she did not answer yet

But we all learn.
In the field, I have a lot of success with teasing in general. Girls giggle and touch right away, when they realize they are not impressing you at all. They talk louder. It's a great ego boost.